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It is my privilege to extend a very warm welcome to you all for the 56th Annual General Meeting of your Company.
I take this opportunity to share the performance highlights during the year and future outlook for the Company.
Financial and Performance Highlights of the Year
In 2018-19, we recorded the highest ever Turnover of Rs. 19,704.55 Crore, which is a 7.8 % increase from the previous year Rs. 18,283.86 Crore. The Profit Before Tax saw a growth of 12% from Rs. 3,239.85 Crore to Rs. 3,627.64 Crore while the Profit After Tax (PAT) increased by 14.8 % from Rs. 1,987.42 Crore to Rs. 2,282.44 Crore. Our Order Book position stood at a healthy Rs. 58,588 Crore, as on 31st March, 2019.
We paid an Interim Dividend of Rs. 19.80 per share of Rs. 10 each (198 %) for the Financial Year 2018-19, totalling to Rs. 662.09 Crore, excluding Dividend Distribution Tax of Rs. 136.09 Crore.
Our focus on production continues and during the year 2018-19, your Company produced 41 new Aircraft and Helicopters. Additionally, we produced 102 New Engines and Accessories. I am proud of our initiatives to indigenise production and become self-reliant, asset out by the Make in India mandate.
Your Company has witnessed several significant achievements during the year, few of which are highlighted as under:
The LCA Tejas, which is a single-seat single-engine aircraft, successfully completed mid-air refuelling trial by Wet (actual) engagement on 10th September, 2018.
Astra Missile was successfully test fired by the IAF on 26th September, 2018.
The third Prototype (PT3) of the Light Utility Helicopter (LUH) made its successful maiden flight on 14th December, 2018.
The Initial Operational Clearance (IOC) of the LCH Army version Helicopter was accorded by CEMILAC on 15th February, 2019.
The Final Operational Clearance (FOC) of the LCA aircraft was received on 20th February, 2019 from ADA.
We successfully accomplished 100 % running of HTFE-25 core-2 Engine with Inlet Guide Vane (IGV) modulation in March, 2019.
As always, new initiatives have been a part of our endeavours and this year too, we have pursued several of them:
During Aero India 2019, the Company had displayed the Naval Utility Helicopter (NUH) with Tail Boom Folding and Main Rotor folding, as a Technology Demonstrator. The NUH is a version of the Advanced Light Helicopter (ALH) Dhruv, customised to meet the operational requirements of the Navy.
The Company also unveiled the Supersonic Omni Role Trainer Aircraft (SPORT) Simulator in Aero India 2019. We have been keen to launch the indigenous development of SPORT (Aircraft) with 4 generation or equivalent capabilities to bridge the gap in pilot training to command front line fighters. The SPORT aircraft will be utilised for fighter training beyond the Advanced Jet Training stage and before inducting pilots into a front line fighter squadron.
MoU with the Government of Arunachal Pradesh was signed in November, 2018 for the deployment of Do-228 aircraft and ALH Dhruv Helicopter for inter and intra-State connectivity.
Consortium Agreement was signed with Larsen & Toubro Ltd. (L&T), Mumbai on 7th December, 2018, as industry-driven prime partners to ISRO, towards manufacturing and delivery of the Launch Vehicles. The Company and L&T will support ISRO in the integration of Launch Vehicles as per their requirement.
We have been seeing a continued increase in passenger travel and demand increase in global military expenditure. This bodes well for the global aerospace and defence industry. The trend is likely to continue in the coming year also. In recent times, geopolitical security threats have intensified global tensions leading to boost in defence expenditure by countries such as the USA, China, India and Japan.
By 2025, we expect India to be the third largest aviation market, with a demand forecast for over 2,000 new aircraft in the next two decades, a majority of these being single-aisle planes.
The growth of India''s defence sector is expected to continue, supported by an increase in India''s defence budget for 2019-20, at 9.31% over the previous year. The fund allocation for defence expenditure stands at Rs. 3,05,296 Crore. The increase in budget is towards modernising the Armed Forces, to strengthen their position for better managing the geo-political tension and potential security threats. Over the years, our Government has undertaken various initiatives to improve the business environment, with policy reforms to provide the required boost to the Indian Aerospace & Defence Industry. We can expect more foreign investment and an increase in export opportunity.
Considering the changing economic and business environment, the Company has formulated strategies that are aligned to the Government''s initiatives and market trend. We are implementing them to maximise the benefits for the Company and to support the development of Indian Aerospace and Defence Manufacturing Industry.
Research and Development (R&D)
During the year, the Company continued to focus its efforts towards development of new platform, technology and activities to enhance its capability with a view to bring technological superiority to its products and in order to cope with the future technological challenges. Towards the progress of the R&D efforts, the Company has incurred a total expenditure of Rs. 1,464.40 Crore for the year 2018-19 which is 7.43 % of the Turnover. Further, an amount of Rs. 214.88 Crore has been transferred to the R&D reserve during the year.
The Company is complying with the Guidelines on Corporate Governance framed by the Department of Public Enterprises (DPE) and SEBI Listing Regulations. The Company has established Systems and Procedures to ensure that its Board of Directors is well informed about the Policies of the Company, to enable them to discharge their responsibilities and to enhance the overall value of all stakeholders. We are constantly reviewing the Policies and Procedures of the Company, and updating them to ensure transparency in all aspects of the Company''s working.
Corporate Social Responsibility and Sustainability Development
As always, your Company is committed to social responsibility. We have undertaken various programmes and projects towards integrating our social and business goals, and in a sustainable manner. During the year, an amount of Rs. 72.46 Crore has been spent on CSR activities.
We continue, and will continue to pursue global standards, and I am confident that the Company will achieve many milestones. We hope to attain all round success with the continued support and guidance of all our stakeholders.
I take this opportunity to extend my sincere gratitude to the Department of Defence Production, the Defence Acquisition Council, Defence Finance, Department of Civil Aviation and our valuable customers viz., the Indian Air Force, Army, Navy, Coast Guard, Border Security Force, ISRO and other Global Aviation Companies.
I also thank DGAQA, CEMILAC, Principal Controller of Defence Accounts, Principal Director of Commercial Audit, C&AG, Statutory & Branch Auditors, Bankers, Legal Advisors, Collaborators, Suppliers, Shareholders and other Agencies and acknowledge their contributions in our achievements.
I am grateful to my colleagues on the Board for their valuable guidance, and acknowledge the immense contribution and dedication of the employees of the Company at all levels.
Place : Bengaluru
Date : 29th July, 2019
Chairman & Managing Director